Have you been putting off retirement planning? Telling yourself that tomorrow you’ll put in the work to figure out the best ways to save now so you can cash out of your job early? Well, you’re in good company. Only two-thirds of Americans have started saving for retirement, and only 50% of Americans even have $10,000 in a bank account. Consider this article an introduction to the world of retirement.
Set Goals for Yourself
The first major step you should take if you want to get ready for retirement is getting an estimate for how much you want to save. There are many free retirement calculator options online. By running numbers through these and trying out different options, you can get a rough number in your head on how much you want to retire with. Doing this step will be very beneficial before moving into the next.
Search for a Retirement Planner
No matter when you begin learning about retirement, there will always be parts of it that are confusing for the average business person. That’s why seeking out a financial advisor or retirement planner is the best path to take. They are the best people equipped to guide you on a path to your retirement calculator goal.
Consider a Retirement Savings Account
More likely than not, the planner that you choose will recommend that you open a savings account specifically for retirement. The two most common forms of these accounts are IRAs and 401(k)s, both of which you have probably heard of.
Although your financial advisor will help you choose which one is right for you, it’s still good to have an idea of what both are before walking into a retirement planner’s office. There are two major forms of IRAs, Roth and traditional. The major difference between the two is when your money is taxed. In a Roth IRA, you pay taxes on the money you put into the account, but don’t have to pay taxes on the money when you withdraw during retirement. In a traditional IRA, you don’t pay taxes on the money you put in the account, but instead, pay taxes as you withdraw the money during retirement.
A 401(k) is given through an employer and is taken out of your paychecks directly. While there can be heavier fees than you would see in an IRA, oftentimes your employer will match part of your funds.
The world of retirement saving can be nothing short of a maze. But when you begin your savings journey with a clear head and solid retirement calculator plan, you will find yourself hitting your goal in no time.